A trust is an arrangement in which one person (the Trustee) holds and manages property for the benefit of another person (the Beneficiary).

What is the difference between a Will and a Trust?

A Trust is a way of transferring your property to an artificial legal entity or "person" before your death, while still having the use and/or control of it during your lifetime. As the Trust owns legal title to the property in it at the time of your death, and the Trust does not die with you, the property does not have to go through "probate". Probate is the legal process which inherited property goes through to transfer the title to the beneficiary. If you have a large estate, or even a small estate with real property (i.e. real estate), it is often advantageous to set up a Trust, as it may be less expensive.  However, the costs of probating an estate in Georgia are much lower than in most states.  We can help you decide whether a Will or a Trust is best for you and your estate.

A Trust, if properly drawn and "funded," can be extremely helpful in many situations such as:

To avoid a conservatorship. If property is held in a Trust, a successor Trustee can step in and take over management, without the delay and expense of going to court to appoint a "conservator" to manage the property, if the Trustee becomes disabled.

To avoid probate. A properly drawn Trust is a separate entity that does not die when the creator dies. The Trustee (or Successor Trustee if the Trust creator also acted as Trustee until his or her death) can take over management of the Trust estate and pay bills and taxes, and promptly distribute the Trust assets to the beneficiaries, without court supervision, if the Trust agreement gives the Trustee that power.  

Maintaining privacy. Trusts, unlike Wills, are generally private documents. Your neighbors and the public would be able to see how much you had and who your beneficiaries were under a Will, but usually not with a Trust.

To help keep certain property separate from other property. For example, if you want your daughter to get your vacation home, and your son to get your house in the suburbs, if you create a separate Trust for each property there would be no question of commingling or who gets what.

In many estate plans, the Trust is the central tool that is used to control and manage property. A Trust continues despite the incapacity or death of the Trust creator, or “Grantor.”  It determines how a Trustee is to act with respect to the Trust estate. It determines how property is to be distributed after the death of the Grantor. A Trust is thus one of the major estate planning tools used for a Grantor's property so that court interference in the event of incapacity or death can be dramatically reduced (if not completely eliminated).

Intervivos Trust - A Trust that is created during the lifetime of the grantor. A common type is a revocable "living" Trust in which the grantor transfers title to property to a Trust, serves as the initial Trustee, and has the ability to remove the property from the Trust during his/her lifetime.

Living Trust:  A Trust created during the lifetime of a grantor which can be altered, changed, modified or revoked. Typically the grantor is the initial Trustee as well as the initial beneficiary of the Trust, with his/her spouse and children as the ultimate beneficiaries of the Trust.

Irrevocable Trust:  A Trust that cannot be altered, changed, modified or revoked after its creation (absent extreme extenuating circumstances). Once a grantor transfers property to an irrevocable Trust, the grantor can no longer take the property back from the Trust.

Charitable Trust:  A Trust established to benefit a particular charity or the public. Typically charitable Trusts are established as part of an estate plan to lower or avoid imposition of Federal (and some states') estate and gift taxes.

Constructive Trust:  An implied Trust established by operation of law. While a person may take legal title to property, equitable considerations require that the equitable title of such property remain with others. Typically fraud is a requirement for the establishment of a constructive Trust, the person who took legal title to the property did so as a result of a fraud brought upon the prior legal title holder.

Express Trusts:  Are those specifically created by the grantor under a Trust agreement or declaration of Trust.

Implied Trusts:  arise from particular facts and circumstances in which courts determine that although there was not any formal declaration of a Trust, there was an intention on the part of the property owner that the property be used for a particular purpose or go to a particular person. For example, if a neighbor asks you to take care of her car for her when she is on vacation, and never returns, there was an implied Trust, as she was not making you a gift of the car.

Resulting Trust:  A Trust that arises from, or is created by operation of law, when the legal title to property is transferred, but the beneficial interest is to be enjoyed by someone other than the person who got the legal title.

Special Needs Trust:  A Trust that is established for a person who receives government benefits so as not to disqualify the beneficiary from such government benefits. Ordinarily when a person is receiving government benefits, an inheritance or receipt of a gift could reduce or eliminate the person's eligibility for such benefits. By establishing a Trust which provides for luxuries or other benefits which otherwise could not be obtained by the beneficiary, the beneficiary can obtain the benefits from the Trust without defeating his/her eligibility for government benefits. Often a Special Needs Trust includes a trigger which terminates the Trust in the event that it could be used to make the beneficiary ineligible for government benefits.

Spendthrift Trust:  A Trust that is established for a beneficiary which does not allow the beneficiary to sell or pledge away his or her interests in the Trust. A spendthrift Trust is beyond the reach of the beneficiaries creditors, until such time as the Trust property is distributed out of the Trust and placed in the hands of the beneficiary.

Tax By-Pass Trust:  A type of Trust that is created to allow one spouse to leave money to the other, while limiting the amount of Federal Estate tax bite that would be payable on the death of the second spouse.

Testamentary Trust:  A Trust that is included under the terms and conditions established in a Will. Such Trusts take effect after the death of the person making the Will.

Totten Trust:  A Trust that is created during the lifetime of the grantor by depositing money into an account at a financial institution in his or her name as the Trustee for another. This is a type of revocable Trust in which the gift is not completed until the grantor's death, or an unequivocal act reflecting the gift during the grantor's lifetime.

Many Trusts themselves establish "sub-Trusts". For example, a revocable "living" Trust might establish spendthrift Trust and a tax by-pass Trusts upon the death of the first spouse. Trusts can be structured to handle a variety of situations but careful drafting is essential to make the plan work.

The only time that you can prepare and implement a Trust and an estate plan is while you are alive and have legal ("mental") capacity to enter into a contract. If you should become unable to manage your own affairs or suffer from some other disability which affects your legal capacity, your Trust may be effectively challenged by those who assert that you lacked capacity at the time the documents were created, that you were subjected to fraud, coercion or undue influence during the creation and implementation of your Trust.

The best time to discuss the need for a Trust and its role as part of a comprehensive estate plan with an attorney is now, while you have the capacity to do so.